Gas prices nudge $4 a gallon, but relief may be in sight

Megan Vilar gets gas on her way to Megan Vilar gets gas on her way to work in Lake Grove on May 1, 2014. Photo Credit: Heather Walsh

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Three weeks before the Memorial Day weekend, regular gasoline is nudging $4 a gallon again on Long Island -- a level not seen here since the height of last summer's vacation season.

But rising inventories of the fuel suggest some relief is in sight for drivers, with prices expected to peak soon and maybe decline through much of the summer.

Regular averaged $3.989 on Long Island Thursday, according to the motorist group AAA -- 19 cents higher than a month earlier and up almost 39 cents from the recent low of $3.60 on Feb. 3. The new average, for buyers paying cash, also is about 24 cents higher than at this time last year. Regular hasn't averaged above $4 on Long Island since July 27.

The reasons for climbing prices, according to experts: higher ethanol prices due to rail congestion in March from the Midwest to the Northeast; refinery shutdowns in March and April for maintenance, repairs and a switch-over to more expensive summer gasoline; and rising demand for gasoline with improved weather. National demand last week was 3 percent higher than a year earlier, at 8.7 million barrels a day, federal figures show, a sign of an improving job market.

Now, say experts, ethanol prices have receded and refineries are humming again, including those in the Northeast; federal figures show them at a 91 percent utilization rate last week, up from 85 percent the week before. Government numbers also show gasoline supplies improving -- although as of last week still 4.4 percent below a year earlier. Gasoline futures have dropped in the past few days.

"I think we're about done with this price run-up," said Tom Kloza, chief oil analyst for the Oil Price Information Service in Wall, New Jersey, which does the surveys for the AAA. "I do believe the prices you see in the next few days or so may be as bad as it gets, at least until August or September, the heart of hurricane season."

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In a forecast last month, the U.S. Department of Energy predicted pump prices this summer would be about the same as last year in most of the nation, including the East Coast.

Said analyst Andy Lipow, president of Houston consulting company Lipow Oil Associates LLC, "I see prices stabilizing in the next few weeks and starting to decline as we go through the summer."

Heating oil prices, meanwhile, have declined since the dead of winter, but the state said they averaged $4.163 per gallon on Long Island Monday, still 12.5 cents above last year.

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